When the World Bank lowered its prospects for the global economy, the U.S. stock market took a small nosedive. When the Federal Reserve left interest rates unchanged a few days later and indicated it did not anticipate an increase in the near future, the market appeared ready for its subdued commentary regarding the economy. You read that unemployment is higher, while consumer confidence has increased. No individual or agency seems capable of accurately forecasting economic machinations. If your small business is striving to survive this ongoing financial turmoil, here are five options to explore.
- Barter for better business. What can your business trade for goods or services you need? Proprietors of restaurants can provide food in exchange for many items. Hairdressers can trade services. If you’re a skilled tradesperson – plumber, electrician, carpenter, etc. – you might be surprised what businesses are willing to exchange for your services. Marketers can offer to develop campaigns or write news releases. A recent note from Mary, a talented Chicago caterer on the brink of financial ruin, may seem familiar to you. Her lost revenues have caused such fear that she wasn’t thinking creatively about how to adapt her business to succeed during the recession and beyond. She has the ability to provide a wide variety of food and a network of contacts far beyond her clientele, which means she can easily target new markets. Long term, these new customers may not comprise her primary business. What is important now is survival – continuing to earn a living during these very tough times.
- Change your product mix. Recently, I’ve been helping find fixtures for a relative who’s building a house on the Gulf Coast. We’re often the only customers in stores, even during prime shopping hours. While there are sales everywhere, in some stores only ugly merchandise is a great deal. There is a 75-year old lighting store, which has traditionally catered to upscale customers and rarely offered major sales. As the recession hit their business, they went to lighting suppliers and bought up attractive, discontinued, merchandise for close-out prices. They’ve held a series of 75 percent off sales. Of course, that’s a discount from what the retail price would have been. Customers don’t care because the chandeliers and lamps are bargain priced, stylish, and enable them to purchase quality that exceeds their budgets. The store still offers pricier lighting although it is also frequently on sale. And they’ve maintained the upscale image of their showroom, which makes patrons feel they’ve scored exceptional deals. How can you adapt your business to attract more customers?
- Use clear vision and creative thinking when evaluating overhead costs. A friend in Northern California has been struggling to keep his a small consulting firm afloat. Knowing how valuable his services are to his clients and that he will be in excellent shape after the recession, I offered to look at details of his business to see if there was any place to cut costs. He uses a large quantity of office supplies. As a resident of a small town, close-knit community, he developed a loyalty to local stores, where he was paying excessively marked-up retail prices. Half of his monthly out-of-pocket expenses were for office supplies. By using a few online out-of-state wholesale vendors and watching for free shipping opportunities, he cut his office supply expenses by 80 percent. Most companies can apply fresh approaches to reduce overhead.
- Seek a partner. Could your business work in tandem with another company? Recently, I heard about a children’s shoe store in New York that moved into a children’s clothing store in the same neighborhood. The clothing store had reduced its inventory due to the recession. This caused their space to have that “going out of business” look. The shoe store, a couple of blocks away, was struggling to pay rent. So the shoe store moved into the clothing store, decreasing their rent by 60 percent. Many customers patronized both stores. The result was happier customers and increased sales for both businesses. Could partnering with another business be right for you?
- Care for your credit. When you lose a major sale you’re counting on or environmental changes beyond your control cause your revenues to diminish, it’s normal to feel overwhelmed. A business can usually restructure its credit with far greater ease than an individual can arrange new payment terms for personal credit. Determine what your business’s reduced budget will allow you to pay on time, swallow your fear, and call your creditors to negotiate new terms that enable you to remain current on all your accounts. You want an ongoing on-time payment history reflected in your business credit ratings to qualify for excellent credit terms in the future.
While these economic challenges can be difficult, you never know what thriving opportunities will emerge as you explore ways to adapt your business for survival.